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Chrysler Is Now Totally Owned By Fiat

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On: Fri, Jan 3, 2014 at 11:29AM | By: Elizabeth Puckett

Chrysler Is Now Totally Owned By Fiat

The auto industry has undergone a major change as Chrysler has just become entirely owned by the Fiat brand. Announced on the first day of 2014, the stake in Chrysler owned by the United Auto Worker’s VEBA trust fund is set to be sold to the Italian auto company—a deal that came to a close on the last Sunday of 2013. This closes the arguments supporting the potential for public share holders and leaves questions about the future of both brands.

Once the sale is completed, the VEBA trust is set to receive $4.35 million for the complete purchase—a large majority, $3.65 billion, will be coming from Fiat, with $1.75 billion of that in cash, and $1.9 billion assigned for special distribution. Interestingly, $700 million will be paid in four annual installments, but Fiat will gain ownership of the Chrysler brand after the first of these payments is made.

Announced on Wednesday in a special press release, the news is being perceived as a very positive deal for both Fiat and the Chrysler name. This deal also keeps any of the remaining shares from entering the stock market under a UAW-forced IPO, a move that could have lowered the value of the Chrysler Group LLC.

The new ownership will allow Fiat to explore new territory and fully realize a vision, many years in the making.

In a statement from the CEO of Fiat, Sergio Marchionne, the exec explains, "The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment."

The agreement incorporates the implementation of the UAW of the best practices possible for all Fiat factories from around the globe into its own production plants. Much of what this means exactly is still unknown as the auto marker is remaining vague about some of the details of the deal.

This was addressed in the press release, saying, “In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of Fiat-Chrysler World Class Manufacturing programs, actively participate in benchmarking efforts associated with implementation of these programs across all of Fiat-Chrysler manufacturing sites to ensure objective performance assessments and provide for proper application of WCM principles and actively assist in the achievement of the Group's long-term business plan.”

This move comes as a surprise to many in the auto industry—most expected Chrysler to become an IPO by the beginning of 2014. It was only during the third week of December that the public learned that negotiations on the deal were underway.

There’s no real word yet on how this will effect the Chrysler name or their parts, service, and care brand, Mopar. It would be surprising if Fiat decided to rebrand any existing Chrysler, Dodge, or Jeep models, but it’s not entirely unimaginable.


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